The naira recorded a modest but steady appreciation against the U.S. dollar in the second trading week of 2026, reflecting improving foreign exchange fundamentals and renewed confidence in Nigeria’s external position.
This is according to trading data from the official foreign exchange market and reserve figures published by the Central Bank of Nigeria (CBN).
The currency closed the week stronger than the previous one, supported by relative market stability, a slight increase in external reserves, and optimistic medium-term projections from the apex bank.
What the data is saying
At the close of trading on Friday, the naira exchanged at N1,424.5/$, strengthening from N1,431/$ recorded at the close of the preceding week.
When compared to the close of second week of 2025 when the naira closed at N1544.5/$ on 10 January 2025, it is still an appreciation.
Trading within the week showed limited volatility, with the naira quoted at N1,428/$ on Monday, N1,416/$ on Tuesday, N1,421/$ on Wednesday and Thursday, before settling at Friday’s level.
Market analysts described the week’s outcome as a mild but positive appreciation, indicating a gradual easing of pressure in the foreign exchange market as the year begins.
The relative stability throughout the week also suggests improved liquidity conditions and better alignment between FX demand and supply.
Supporting the naira’s performance, Nigeria’s foreign exchange reserves rose marginally to $45.62 billion on Tuesday, from $45.60 billion on Monday, according to CBN data.
While the increase was slight, it provided an additional buffer for the local currency and helped anchor market expectations.
Also, CBN expressed optimism about the medium-term outlook for the naira, projecting that external reserves could rise to about $51.04 billion in 2026, from an estimated $45.01 billion in 2025.
The apex bank attributed this outlook to easing FX pressures, improved oil earnings, planned sovereign bond issuances, and increased diaspora remittance inflows.
The CBN also pointed to developments in Nigeria’s domestic refining capacity as a key structural factor expected to support the naira over time, as reduced dependence on imported petroleum products could significantly lower FX demand.
Why this matter
A stronger and more stable naira helps reduce imported inflation, improves investor confidence, and supports broader macroeconomic stability.
- Rising external reserves enhance the CBN’s ability to manage volatility in the FX market, while improved oil earnings and capital inflows strengthen Nigeria’s balance of payments position.
- Commenting on the outlook, Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), described prospects for the naira in 2026 as largely positive, citing the strength of external reserves as a key stabilising factor.
He noted that sustained policy consistency, stronger export earnings, and continued FX market reforms would be crucial to preserving recent gains.
What you should know
Nigeria’s FX market has seen gradual improvements following reforms aimed at improving transparency and liquidity.
External reserves remain a critical indicator for currency stability and investor sentiment.
